Introduction
Every front page and news bulletin is dominated by news of the ongoing conflict in Ukraine. Images, stories, and articles have prompted millions of people all over the world to want to help. One way people are helping Ukraine is by donating cryptocurrency. Let’s explore the impact of cryptocurrency in Ukraine, highlighting the advantages of crypto during uncertain, unstable periods and consider what could happen next.
How is crypto helping Ukraine?
There are various advantages of cryptocurrencies, which have come to the fore during the conflict in Ukraine. These include:
- Making quick, seamless donations: the situation in Ukraine has compelled citizens from countries across the world to reach into their pockets and make a donation. One of the primary benefits of crypto in Ukraine is speeding up and simplifying the process of donating money to good causes. Official government accounts tweeted links to ethereum and bitcoin addresses to support the Ukrainian army within days of the invasion. Statistics indicate that over $60 million worth of cryptocurrencies has already been donated to the government (source). With DeFi crypto donations, there is no intermediary, which not only saves time, but also prevents donors from paying for services to convert money and oversee transactions.
- Scalability: the conflict has provoked a global outcry, which has contributed to millions of dollars being donated to charities, Ukrainian authorities and causes that are helping to arm Ukrainians and provide humanitarian support. The ability to accept and process donations at scale is a significant benefit. The ease of collecting vast sums of money makes donating crypto funds preferable to traditional monetary donations.
- Removing red tape and enhancing financial security: speed is critical in this scenario since people are in need of urgent help. Cryptocurrencies, such as bitcoin, can be transferred rapidly with no need to go through red tape. Crucially, at a time when the country is under threat from an invader, there is also no risk of that force stealing the funds or Ukraine losing out on the money if central banking systems are compromised.
Are there any downsides?
There are several advantages to using cryptocurrencies and NFTs to support Ukraine, but it’s also important to be aware of potential downsides. While cryptocurrencies provide benefits for Ukraine while major banking systems are under threat and time is of the essence, it is essential to note the potential benefits for Russia. Foreign policy experts have indicated that Russia is likely to become much more dependent on cryptocurrencies due to international sanctions, which have crippled the rouble. In March 2022, the rouble hit an all-time low of 106.01 per dollar (source). Russia is already reported to be developing its own digital currency, and if people start using decentralized systems, there is a risk that sanctions will start to lose their clout rapidly.
Conclusion
Cryptocurrency has come to the fore since the conflict in Ukraine started in February 2022. Cryptocurrencies are helping Ukraine to access donations quickly and seamlessly and maintain open routes to funding while central banking systems are diminished and threats loom large. Crypto donations are fast, convenient and safe for recipients, but the rise of cryptocurrency is also likely to help Russia reduce the impact of tough economic sanctions.
